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THE WOODLANDS TOWNSHIP

Board of Directors Meeting

STRATEGIC PLANNING SESSION

July 24, 2021

MINUTES

THE STATE OF TEXAS   §

COUNTIES OF HARRIS & MONTGOMERY   §

             The Board of Directors of The Woodlands Township met in regular session, open to the public, on July 24, 2021, posted to begin at 8:00 a.m. The meeting was held in in Conference Room 150/152 at the office of The Woodlands Township, 2801 Technology Forest Boulevard, The Woodlands, Texas, within the boundaries of The Woodlands Township.
             
STANDARD ITEMS
             
1. Invocation / Pledge of Allegiance;

No invocation was provided. Chairman Gordy Bunch led the Pledge of Allegiance to the United States flag and to the Texas State flag.
             
2. Call meeting to order;

Chairman Gordy Bunch called the meeting to order at 9:32 a.m. and declared that notice of this meeting was posted 72 hours in advance inside the boundaries of The Woodlands Township at the office building located at 2801 Technology Forest Boulevard, The Woodlands, Texas, and posted online at www.thewoodlandstownship-tx.gov. The roll was then called of the duly elected members with all members being present.
Present: Chairman Gordy Bunch; Vice Chairman Bruce Rieser; Secretary Shelley Sekula-Gibbs; Treasurer John Anthony Brown; Director Bob Milner; Director Jason J. Nelson; Director Ann Snyder
Staff Present: Jeff Jones, Monique Sharp, John Powers, Karen Dempsey, Todd Stephens, Nick Wolda, Palmer Buck
             
3. Receive, consider and act upon adoption of the meeting agenda;
  Motion by: Vice Chairman Bruce Rieser moved to adopt the agenda.
  Second by: Director Ann Snyder 
Passed: Chairman Gordy Bunch YES
Vice Chairman Bruce Rieser YES
Secretary Shelley Sekula-Gibbs YES
Treasurer John Anthony Brown YES
Director Bob Milner YES
Director Jason J. Nelson YES
Director Ann Snyder YES
 
             
4. Recognize public officials;

There were no public officials in attendance.
             
5. Public comment;

There were no individuals who provided public comment.
             
REGULAR AGENDA
             
6. Receive, consider and act upon review of proposed 2022 Budget Objectives and related Five-Year Plan;

Note:
There was no action taken on this agenda item.

Monique Sharp, Assistant General Manager of Finance and Administration, shared the Township's Five-Year Plan Assumptions, which included information pertaining to new residential units for 2023 through 2025 and the average cost per unit for those same years; new commercial property values for 2023 through 2026; revaluation of existing taxable property projected at 2.5 % for 2022 and 2% for 2023 through 2026; a property tax rate of $0.2231 for 2022 through 2026; sales tax growth estimated at 3% for 2022 and 2.75% for 2023 through 2026; and hotel tax growth estimated
at 25% for 2022 and 2023 and 2.5% for 2024 through 2026. Board discussion followed.

Ms. Sharp then shared that, in regard to expenses, a 2.25% inflation rate has been built-in to the assumptions for 2023 through 2026. She advised that the larger costs relating to Capital Projects funding are funded through Capital Replacement Reserves. Board discussion followed.

Ms. Sharp reported information regarding Sales and Use Tax revenues by business sector, with the largest increases being in Retail Trade and Accommodations and Food Services. She noted that the rise in Retail Trade is mainly due to an increase in internet sales, although big box store sales are also trending up compared to last year. Ms. Sharp also noted that sales tax revenues generated by the Information sector starting trending up in January 2021, fell somewhat in February, and then has continued an upward trend since March 2021. Sales Tax revenues relating to the Manufacturing and Professional/Technical industries have been trending up since January 2021. Board discussion followed.

Ms. Sharp shared that there were large increases in the Sales and Use Tax growth rate from 2012 through 2015, mainly due to significant development in Hughes Landing and Town Center. The sharp decline in 2016 was the result of national and regional economic factors, particularly as they pertained to the oil and gas sector. From 2017 through 2019, growth in the sales tax base remained steady, averaging about 2.75% annually. Although the COVID-19 pandemic has a negative impact on sales tax revenues in 2020, 2021 sales tax revenues are on track to rise back to pre-COVID levels. As a result of the upward trends, a 3% growth estimate is being projected for the 2022 budget, and an annual growth factor of 2.75% is assumed for year 2023 – 2026 of the Township’s five-year plan. Board discussion followed.

Ms. Sharp reported that growth in hotel tax revenues are projected at 25% for 2022 and 2023 as business and leisure travel return to pre-COVID levels. Annual growth assumptions return to a normal level of 2.5% for 2024 through 2026. Ms. Sharp then shared that hotel occupancy tax revenues are estimated to be $7.3 million in 2022, with $2.9 million allocated to debt service on the Township’s revenue bonds (40%), $2.5 million allocated to Visit The Woodlands (34%), $0.1 million allocated to trolley operations – phase 3 (1%), and the remaining $1.8 million allocated to the Hotel Tax Reserve (25%). Board discussion followed.

Ms. Sharp shared information regarding the 2021 Revenue Forecast, which includes projected increases in property tax revenues of $700,000 due to uncollectible accounts not being as high as anticipated. Sales tax revenues are expected to be $1.7 million higher than the original 2021 budget. The forecast predicts a loss in parks and recreation program fess of $286,000, and Park and Ride bus fares and grant revenues of $2.3 million, both due to the COVID-19 pandemic. Ms. Sharp shared that interest rates have declined, causing a projected loss in interest income of $375,000. She then shared that there was a $1.3 million increase in Other Income due to a tax abatement recapture.

Ms. Sharp stated that 2021 expenditures decreased by $6 million. She reported that the decreases were mainly contributed to Transportation and Capital Project deferrals, as well as budget cuts in various Township departments. She noted that the budget cuts did not impact current service levels.

Ms. Sharp reported that the Capital Contingency Reserve, which is used to fund "one-time" purchases or other reserves, has a current balance of $12.2 million. Ms. Sharp proposed that $6.5 million of balance be allocated to the Capital Replacement Reserve, $3.5 million be allocated to the Operating Reserve, and the remaining balance of $2,213,130 be left in the Capital Contingency Reserve. Board discussion followed. The consensus of the Board was to reallocate the $12.2 million in the Capital Contingency Reserve as proposed.

Ms. Sharp observed that the current balance of the Operating Reserve is $22.2 million. She also shared the projected balances through 2026 based on maintaining the current funding method of 20% of General Fund Operating Expenses. Ms. Sharp proposed an alternate funding method of prefunding the Operating Reserve by allocating $4.3 million from the Sales Tax Reserve and $3.5 million from the Capital Contingency Reserve. Ms. Sharp then shared the Operating Reserve balances through 2026, comparing the original funding method to the proposed new funding method. She also shared how the funding changes would positively impact the Township’s bond ratings. Board discussion followed. The consensus of the Board was to implement the proposed new funding methodology.

Ms. Sharp shared that the Township currently funds the Capital Replacement Reserve with an annual allocation of $5.25 Million. She indicated that the reserve balance ranged from $32.6 Million in 2022 to an estimated $26.5 Million in 2026. Ms. Sharp proposed allocating $6.5 million from the Capital Contingency Reserve to the Capital Replacement Reserve. She also proposed than the annual allocation to the Capital Replacement Reserve be lowered from $5.25 million to $4.25 million. She noted that making this change in funding would result in annual fund balances of $39.1 Million in 2022, to $29 Million in 2026. She then shared information regarding the results of the proposed funding change compared to the current funding method. Board discussion followed. The consensus of the Board was to implement the proposed new funding methodology.

Ms. Sharp shared information regarding balances in the Township's other discretionary and non-discretionary reserves.

Ms. Sharp then shared the next steps in the budget process. Board discussion followed.
             
7. Receive, consider and discuss the Township’s Transportation program and related Five-Year Plan;

Note: There was no action taken on this agenda item.

John Powers, Assistant General Manager of Community Services, thanked Monique Sharp, Assistant General Manager of Finance & Administration, as well as the Finance Department staff and the Transportation and Infrastructure Department staff for assisting in putting this presentation together.

Mr. Powers shared that ridership for The Woodlands Express Park & Ride has remained constant at approximately 500,000 riders from 2016, until the COVID-19 pandemic, where ridership dropped to 157,847 in 2020, and 50,787 for year-to-date 2021. He shared that The Woodlands Express is currently operating on a reduced schedule with the most active rides taking place at the Research Forest Park & Ride lot, followed by the Sawdust lot, and then the Sterling Ridge lot. Staff predicts that ridership will increase as businesses continue to re-open. Board discussion followed.

Mr. Powers shared current The Woodlands Express Park & Ride and Town Center Trolley service maps. He shared that the Town Center Trolley is showing a rebound in ridership since the onset of the COVID-19 pandemic, with the onset of concerts at the pavilion and mall area services re-opening. Mr. Powers also shared that expenses necessary to continue Park & Ride operations will increase from $4.8 Million in 2022, to $5.2 Million in 2026, should the funding sources remain status quo with no changes in the current COVID-19 ridership level of 800 passengers per day. He shared that Township contributions to the Park & Ride service will increase from $643,435 in 2023 to just over $1 Million in 2026. Board discussion followed.

Mr. Powers shared financial information regarding the Park & Ride operations, should it remain status quo. He then shared two scenarios of proposed changes to Park & Ride operations. Example 1 provided that, if the Township were to maintain the current COVID-19 level schedule, increase the fare by $1, and receive an estimated 25% ridership increase, the Township's financial contribution to the Park & Ride service is estimated to reduce from $378,835 in 2023, to $313,727 in 2026, with a sharp increase in funding contributions of $523,504 in 2024. Mr. Powers reported that the last Park & Ride fare change was a $2 fare increase implemented in 2016. Example 2 provided that, if the Township were to reduce the Park & Ride schedule and implement a fare increase, the Township's financial contribution to the Park & Ride service would change to "no contribution necessary" in 2023, to $179,685 in 2024, $149,001 in 2025, and then to $58,132 in 2026. Board discussion followed.

Mr. Powers shared that, under the recently approved Park & Ride Energy Corridor pilot program, the Township's match for that program would be $57,987 in 2022, $54,114 in 2023, and $52,025 in 2024. He then shared that, at the end of the three-year pilot program, should the Township wish to continue to provide Park & Ride services to the Energy Corridor, the Township's financial contribution would be $117,227 in 2025, and $122,267 in 2026. Board discussion followed.

Mr. Powers shared information regarding expenses and funding sources pertaining to the Township's Trolley Program. He shared that there is no required Township match in 2022 or 2023, however, the required Township match increases to $335,713 in 2024, to $402,308 in 2026.

Mr. Powers then shared information regarding the various transportation initiatives and those fund balances. Mr. Powers shared potential Park & Ride services additions, as well as information about fare increases. He then advised of potential Trolley services expansions/changes, route expansions, amenity upgrades, as well as the potential of using the Trolleys to generate revenue through advertising. Lastly, Mr. Powers reported information regarding Trolley replacement planning options. Board discussion followed.
             
8. Receive, consider and discuss The Woodlands Fire Department capital replacement and Five-Year Plan;

Note: There was no action taken on this agenda item.

Note: Just prior to the beginning of this agenda item, Chairman Gordy Bunch called for a short recess. The meeting recessed at 11:27 a.m. and reconvened at 11:35 a.m.

Palmer Buck, Fire Chief for The Woodlands Fire Department (TWFD), shared information regarding a proposed Westside Fire Company, which included per year costs to operate the company, potential SAFER Grant contributions, Capital Budget impacts and staff impacts. Chief Buck shared information about current and future plans for applying for the SAFER Grant, as well as plans for potential Township funding of the fire company, in the event that TWFD is unable to receive SAFER Grant funding. Board discussion followed.

Chief Buck shared information regarding Fire Station 5's reconstruction, including the cost to repair and remodel Fire Station 5, estimated at $5 Million, and the cost to build a new fire station at a different site, estimated at $6 Million. Chief Buck shared a proposal for the program and design of Fire Station 5 at its current location with added space to accommodate a second company. Chief Buck also proposed a program and design of a brand-new fire station to be built on a new site. Board discussion followed.
             
9. Receive, consider and discuss Incorporation Planning Study matters (as requested by Chairman Bunch); 

Note:  There was no action taken on this agenda item.

Chairman Gordy Bunch shared that he requested this agenda item in the event that it was necessary to discuss any incorporation related matters, the Board would have the ability to do so. Chairman Buch stated that he did not feel it necessary to discuss any incorporation related matters at this time.

Chairman Bunch shared that the purpose of the Strategic Planning Session was to lay the foundation of the five-year budget plan and get reserve funds cleaned up to allow for the completion of the incorporation financial analysis, which will be reviewed at a future meeting.
 
             
CLOSED MEETING (if applicable)
             
10. Recess to Executive Session to discuss matters relating to real property pursuant to §551.072, Texas Government Code; deliberation of economic development negotiations pursuant to §551.087, Texas Government Code; discuss personnel matters pursuant to §551.074, Texas Government Code; discuss IT network or critical infrastructure security pursuant to §551.089, Texas Government Code; and to consult with The Woodlands Township’s attorney pursuant to §551.071, Texas Government Code;

Chairman Bunch shared that it would not be necessary to recess to executive session.
             
11. Reconvene in public session;

It was not necessary to reconvene in public session.
             
12. Adjournment.
  Motion by: Treasurer John Anthony Brown moved to adjourn the Strategic Planning Session at 11:50 a.m.
  Second by: Director Ann Snyder 
Passed: Chairman Gordy Bunch YES
Vice Chairman Bruce Rieser YES
Secretary Shelley Sekula-Gibbs YES
Treasurer John Anthony Brown YES
Director Bob Milner YES
Director Jason J. Nelson YES
Director Ann Snyder YES
 
_____________________________________
Shelley Sekula-Gibbs
Secretary, Board of Directors

    

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